India: The Real Estate (Regulation And Development) Bill, 2013

Last Updated: 13 August 2013
Article by Sharad Sharma

After much delay and deliberation The Real Estate Regulation and Development Bill, 2013 ["Bill"] has been approved by the Union Cabinet on June 4, 2013, though this bill is yet to be approved by Parliament i:e lok sabha or the lower house of the parliament and the Rajya Sabha or the upper house of the parliament The bill will be notified as a statute once it receives the assent of the President of India for its implementation across all States and Union Territories in the country.

The passing of this Bill is best stated as a delayed step of the Indian government towards regulation of real estate sector. This Bill aimed to create a Real Estate Regulatory Authority and an Appellate Tribunal that will act as a watchdog for the housing sector, primarily towards protecting consumer interests while creating an alternative redress mechanism for any disputes that may arise.

This bill also aims to provide a uniform regulatory environment in the real estate sector which is laced with black money, corruption, red tapism, land mafias and corruption. The core objective of this Bill are twofold i:e to ensure sale of immovable properties in an efficient and transparent manner and to protect the interest of consumers in the real estate sector.

Applicability of the bill

The proposed Bill has limited its applicability to residential real estate only i.e. housing and any other independent use ancillary to housing. The Bill defines

  • "real estate project" as the development of a building or a building consisting of apartments, or converting an existing building or a part thereof into apartments, or the development of a colony into plots or apartments, as the case may be, for the purpose of selling all or some of the said apartments or plots or buildings and includes the development works thereof
  • ''apartment" whether called dwelling unit, flat, premises, suite, tenement, unit or by any other name, means a separate and self-contained part of any immovable property located on one or more floors or any part thereof, in a building or on a plot of land, used or intended to be used for residential purposes, or for any other type of independent use ancillary to the purpose specified and includes any covered garage, whether or not adjacent to the building in which such apartment is located which has been provided by the promoter for the use of theallottee for parking any vehicle, or as the case may be, for the residence of any domestic help employed in such apartment

Major Highlight of the Bill

The provisions of this Bill are applicable only to residential projects.

  • Prior approval before launch and advertisement- This bill contains provisions restricting launch of projects or advertisements unless all approvals are received and all the agents are not expected to facilitate the sale of immovable property which are not registered with the Authority and to maintain books of accounts, records and documents.
  • Mandatory deposit of fund- It makes mandatory upon the promoters to deposit 70 per cent or such lesser per cent as notified by the government to cover the construction cost of the project of funds in a separate bank account to ensure timely completion and prevent fund diversion.
  • Registration of real estate project and real estate agent - The bill also ensures mandatory registration of real-estate projects and real-estate agents with the Authority, except when the land proposed to be developed is less than 1000 square meters. This provision is likely to provide another level of protection to buyers while also preventing concerns regarding money laundering by the non-organised broker community.
  • Disclosing of mandatory information - The real - estate agents / developers are now required to disclose material information such as details of the promoters, project, layout plan, plan of development works, land status, carpet area (as opposed to super area) and number of the apartments booked, status of the statutory approvals and disclosure of proforma agreements, names and addresses of the real estate agents, contractors, architect, structural engineer etc on the Authority's website.
  • Restriction on taking advance - Prohibition on taking more than ten percent as advance from the buyers without a written agreement and also the developers/ agents are required to refund to buyers the full amount in case of delay of projects.
  • Liability/ Penalty – The Bill prescribed for Civil and criminal liability for the contravention of various provisions of the Bill, such as, imprisonment up to three years or a penalty up to ten per cent of the estimated cost of the real estate project for projecting out misleading information in advertisements or prospectus
  • Real estate regulatory authority – The Bill give the power to establish one or more Real Estate Regulatory Authority in each State/UT, or one Authority for two or more States/UT, by the Appropriate Government, specifying their functions, powers, and responsibilities to exercise oversight of real estate transactions. The Bill shall also appoint adjudicating officers to settle disputes between parties, and to impose penalty and interest.

Real estate regulatory authority – powers and functions

  • The Authority will act as a nodal agency to co-ordinate efforts regarding development of the real estate sector and render necessary advice to the appropriate Government to ensure the growth and promotion of a transparent, efficient and competitive real estate sector.
  • The authority shall ensure compliance of the obligations cast upon the promoters and the allottees and to cause an inquiry to be made into compliance of its orders or directions made in exercise of its powers
  • To host and maintain a website of records of all real estate projects within its jurisdiction as database, with all details as provided in the application for registration under the Act, for projects, for which registration has either been granted or cancelled as the case may be;
  • To make recommendations on protection of interest of the allottees, measures to improve the processes and procedures for clearance and sanction of building plans and development projects from the Competent Authority; and construction and maintenance of structurally safe, environmentally sustainable, and low cost buildings, apartments and properties and any other form of assistance or advocacy to promote competition and efficiency in the real estate sector.
  • Regulatory Authority shall have the power to call for information, conduct Investigations, and make inquiry in the affairs of promoters where it considers expedient so to do it
  • Regulatory Authority has the power to Issue directions to promoters and allottees from time to time and such directions are binding on all concerned.
  • Powers of the Regulatory Authority consequent upon lapse of or cancellation of registration of the promoter to recommend to the Competent Authority to have the remaining development works,carried out from the proceeds of the enforcement of bank guarantee and recover charges incurred on the said development works due from the promoter.
  • The Regulatory Authority shall have powers to regulate its own procedure and shall be guided by the principles of natural justice and shall have all the powers as are vested in a Civil Court under the Code of Civil Procedure,1908

Penalties

  1. Any promoter who fails to register in accordance with the provisions of the Real Estate (Regulation and Development) Bill,2013 shall be punishable with imprisonment for a term which may extend to three years, or a penalty which may extend to ten per cent of the estimated cost of the real estate project, or with both.
  2. If any promoter contravenes any other provisions of this bill, other than that provided above, or the Rules or Regulations made , he shall be liable to a penalty which may extend to five percent of the estimated cost of the real estate project.
  3. Any promoter who willfully fails to comply with orders of the Authority shall be liable to a minimum penalty of one lakh rupees for every day during which such default continues, which may extend to five percent of the estimated cost of the real estate project.
  4. Any promoter who willfully fails to comply with the orders of Appellate Tribunal shall be punishable with imprisonment for a term which may extend to one year or with a penalty which may extend to ten percent of the estimated cost of the real estate project, or with both.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Sharad Sharma
 
In association with
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert
Email Address
Company Name
Password
Confirm Password
Mondaq Topics -- Select your Interests
Accounting and Audit
Anti-trust/Competition Law
Consumer Protection
Corporate/Commercial Law
Criminal Law
Employment and HR
Energy and Natural Resources
Environment
Family and Matrimonial
Finance and Banking
Food, Drugs, Healthcare, Life Sciences
Government, Public Sector
Immigration
Insolvency/Bankruptcy, Re-structuring
Insurance
Intellectual Property
International Law
Law Practice Management
Litigation, Mediation & Arbitration
Media, Telecoms, IT, Entertainment
Privacy
Real Estate and Construction
Strategy
Tax
Transport
Wealth Management
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.